Jet, SpiceJet increase fares by steep 25 per cent; more airlines to follow suit

Jet_Airways airfare.jpg

New Delhi: In a bad but expected news for air passengers, airfares have gone through the roof over the past couple of days, with all scheduled carriers either having already hiked fares or being in the process of doing so. 
In some of the sectors, the air-fares have almost doubled, effecting an increase of about 90 per cent already. For instance, the air-fare for a one-way Delhi-Mumbai ticket was about Rs 9,200 on Wednesday, up from about Rs 5,000 on Monday.
Jet Airways followed its smaller rival SpiceJet on Wednesday and hiked fares by a steep 25 per cent to mitigate the impact of the sharp fall in the rupee value and a near 15 per cent spike in oil prices of late. 
"The airline has hiked its fares by 25 per cent with immediate effect," a Jet Airways source said.
Asked whether the hike is on fuel surcharge or base fare, the source said, "it (increase) is in total fares." The move comes in the wake of a nearly 25 per cent fall in the rupee against the dollar and a recent 6.9 per cent hike in aviation turbine fuel, sources said.
International oil prices have been trading between USD 105 and USD 115 a barrel since the past few months and following the Syrian crisis, has seen more upward spurt.
On Tuesday, cash-strapped budget carrier SpiceJet, which has been put on a cash-n-carry mode by airport operators recently, increased prices by a similar amount, citing the same reasons.
Other airlines are also likely to follow suit in the near future. 
Spokespersons for national carrier Air India and market leader IndiGo were unavailable for comment on the expected airfare hike. Travel websites and travel agents also confirmed that airlines have hiked fares by about 25 percent on an average already.
The air-fares have been hiked following a steep seven percent hike in the prices of aviation turbine fuel (ATF) by state-owned oil firms that have seen ATF prices going to an all-time high. 
The Civil Aviation Ministry is also convening a conference of civil aviation ministers of all the states in the Capital on September 10 and is likely to request the states to lower sales tax on ATF which accounts for 45 percent of the operating costs of airlines.
The Union Government has so far not taken any decision on placing ATF in the declared goods category - that will see a uniform sales tax of four percent levied on ATF - despite the Civil AviationMinistry pushing for this for the past so many years.
President of travel booking website Yatra.com Sharat Dhall said, "There are multiple factors at play in this significant increase in airfares, ranging between 15 per cent to 25 per cent across sectors. The effect of the depreciating rupee, the hike in the aviation turbine fuel prices, significant pre-bookings via promotions earlier in the year, combined with the fact that all airlines had reduced their prices during the off season, have all led to a sudden rise in the airfares at this time. This rise in airfares will certainly be a big blow to demand in the forthcoming festive and leisure travel season."
"The increase in air-fares by about 25 percent so far by airlines is just the first instalment of the air-fare hike. Airlines now are bound to further hike air-fares as the festival season approaches in October," said travel agent Rajji Rai who is also vice-president of the Universal Federation of Travel Agents Association (UFTAA).
The ultimate quantum of air-fare hike is expected to surpass 50 per cent on an average across all sectors ultimately.
Jet fuel (ATF) prices were hiked by a steep 6.9 per cent, taking the rate to Rs 75,031 per kilolitre (KL) from September 1. This hike had come on the back of two rounds of ATF price hikes effected in July and August by oil marketing companies. ATF prices were increased by 5.8 per cent on July 1 and by another 6.3 per cent on August 1. 
 

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